Exhibit (10) - 1334945 Ontario Limited Independent Contractor Agreement
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INDEPENDENT CONTRACTOR AGREEMENT
THIS AGREEMENT made as of the 1st of April, 2000
BETWEEN:.
1334945 ONTARIO LIMITED
(hereinafter referred to as the "Contractor")
OF THE FIRST PART
AND
GREGORY MAVROUDIS
(hereinafter referred to as the "Principal ")
OF THE SECOND PART
AND
TENGTU INTERNATIONAL CORPORATION
(hereinafter referred to as the "Corporation")
OF THE THIRD PART
WHEREAS the Corporation desires to retain the Contractor to provide the
Services described in this Agreement;
AND WHEREAS the Contractor desires to perform the Services for the
Corporation;
NOW THEREFORE in consideration of the mutual promises and covenants
contained in this Agreement, the parties agree as follows:
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1. Definitions
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1.1 In this Agreement:
(a) "Agreement" means this Agreement, all schedules attached, and
any amendments made to the foregoing;
(b) "Cause for Termination" means:
(i) the failure by the Contractor to perform, observe or
comply with any material term, condition or obligation
required under this Agreement, including the requirement
to provide the Services, if such failure has continued for
a period ten (10) days after written notice of such
failure has been given by the Corporation to the
Contractor; or
(ii) the engaging by the Contractor in any act that is
materially injurious to the Corporation, monetarily or
otherwise; or
(iii) the engaging by the Contractor in any criminal act of
dishonesty resulting or intended to result directly or
indirectly in personal gain of the Contractor at the
Corporation's expense; or
(iv) notwithstanding (i) above, a material breach by the
Contractor of the provisions of Section 6.1 at any time;
or
(v) such other cause for termination as determined by a court
of law in any legal proceeding between the parties hereto.
(c) "Confidential Information" means collectively the confidential
information of the Corporation and includes but is not limited
to information: concerning the present and contemplated
products, services, techniques, strategies and modes of
merchandising evolved, issued and/or used by the Corporation;
concerning the client lists and customers of the Corporation,
their names, addresses, tastes and preferences; concerning
employees of the Corporation or applicants for employment with
the Corporation, their names and addresses; and concerning the
existence of this Agreement, its contents and negotiations
between the parties, financial information and data of the
Corporation, contacts and contracts of the Corporation, all
other technical information, and all Work products. For the
purposes of this definition, Corporation shall be defined to
include all of its affiliated and related entities;
(d) "Date of Termination" means the earlier of:
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(i) the expiry of the Term and
(ii) the date of termination of the contractor arrangement.
(e) "Person" means a natural person, firm, trust, partnership,
association, corporation, syndicate, government or
governmental board or agency;
(f) "Services" means the services provided by the Contractor to
the Corporation as described under Section 3.1;
(g) "Term" means the initial term of the Agreement set out in
Section 2.1 and any extensions agreed to by the parties; and
(h) "Workproduct" is defined to include but is not limited to all:
processes, studies, flow charts, diagrams, devices, original
works of authorship, know-how, copyrights, inventions,
trademarks, programs, software and all other tangible or
intangible material of any nature including all other
intellectual property, developed by the Contractor during the
Term, whether conceived of or developed on the Corporation's
time or on the Contractor's private time, provided the
Workproduct is reasonably capable of use in connection with
the business of the Corporation.
2. Term
----
2.1 Subject to earlier or later termination as allowed in this Agreement,
the term of this Agreement shall be for a period of two (2) years
commencing on the effective date of this Agreement and terminating on
the second anniversary date of this Agreement.
2.2 Not withstanding 2.1, this Agreement his a six month probationary
period that ends on September 30th,2000. The Corporation shall notify
the contractor of its intent not to proceed by September 1st, 2000
otherwise the probationary period will be deemed to have expire and
this Agreement is binding.
3. Duties of Contractor and the Principal
--------------------------------------
3.1 The Contractor agrees to use best efforts to enhance and improve the
business and profile of the Corporation and shall, without limiting the
generality of the foregoing, provide the following services to the Corporation:
(a) provide the services described in Schedule "A" to this
Agreement; and
(b) act honestly, in good faith and in the best interests of the
Corporation and shall exercise the degree of diligence and
responsibility that a person having the
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Contractor's expertise and knowledge of the affairs of the
Corporation would reasonably be expected to exercise in
comparable circumstances.
3.2 The Contractor's services hereunder shall be performed at locations to be
designated by the Corporation from time to time.
3.3 The Contractor agrees to provide the services of the Principal, (and such
other person, subject to the Corporation's prior approval) as are requested by
the Corporation during the term of this Agreement.
3.4 The Principal agrees to provide such services as are requested by the
Contractor and the Corporation during the term of this Agreement and the
Principal agrees to give notice of his resignation at his present place of
employment forthwith after the effective date of this Agreement.
4. Reporting Procedures
--------------------
4.1 The Contractor shall report to the CEO or the CEO's designate from time to
time. Except as may be specifically provided in Schedule "A", the Contractor
shall report fully, on a monthly basis, on the status of the Services and
results obtained and advise to the best of the Contractor's ability in
accordance with reasonable business standards on business matters that may arise
from time to time during the Term.
4.2 Within seven (7) days following the end of the Term, the Contractor shall
deposit with the Corporation a list of all Confidential Information obtained by
the Contractor during the previous month.
5. Remuneration
------------
5.1 As remuneration for the covenants of the Principal and the Contractor, each
of them hereby directs the Corporation to:
(a) pay to the Contractor a fee for the Services in accordance
with Section 5.2 and Schedule "A" (the "Fee"); and issue the
Contractor shares of the Corporation and in addition, issue
the Contractor Stock Options to purchase shares of the
Corporation, as attached in Schedule "B". (b) reimburse the
Contractor for all reasonable expenses incurred by the
Contractor while rendering Services, provided that the
Contractor supplies the Corporation with vouchers, receipts,
invoices or other reasonable details in respect of any
expenses for which the Contractor desires to be reimbursed by
the Corporation.
5.2 The Contractor shall be paid for the Services monthly in advance.
5.3 The Corporation shall pay the Contractor's expenses within thirty (15) days
following receipt of an invoice with all necessary supporting documentation.
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6. Non-Competition. Non-Solicitation and Confidentiality
-----------------------------------------------------
6.1 The Contractor acknowledges that the Contractor has and will be entrusted
with Confidential Information. The Contractor acknowledges that the Confidential
Information may be disclosed verbally or in writing at any time to the
Contractor and that disclosure of any of the Confidential Information to
competitors of the Corporation or to the general public would be highly
detrimental to the best interests of the Corporation. The Contractor further
acknowledges that the right to maintain confidential the Confidential.
Information constitutes a proprietary right that the Corporation is entitled to
protect. Accordingly:
(a) the Contractor covenants and agrees with the Corporation
that the Contractor will not disclose any of the Confidential
Information to any Person nor shall the Contractor use the
same for any purposes other than those of the Corporation;
(b) the Contractor covenants and agrees that, the Contractor
will nowhere in the area set out in Schedule "A" during the
Term and for a one year period following the Date of
Termination directly or indirectly either individually or in
conjunction with any Person engage in, or provide services the
same as or substantially similar to the Services to any Person
engaged in, any business similar to the business of the
Corporation;
(c) the Contractor covenants and agrees that all Workproducts
shall be the sole and absolute property of the Corporation.
Any Workproduct generated by the Contractor shall be deemed to
be a work made for hire and the Contractor shall have no
proprietary interest in same. The Contractor hereby grants,
conveys and assigns to the Corporation the entire right, title
and interest, domestic and foreign, including copyright, in
and to each and every Workproduct and further agrees to sign
all applications for copyright, patents, assignments and other
papers and writings and to perform all acts necessary or
convenient to evidence the Corporation's ownership in the
Workproducts;
(d) the Contractor covenants and agrees with the Corporation
that during the Term and at any time during a two year period
following the Date of Termination the Contractor will not,
either individually or in conjunction with any Person induce
any employee of the Corporation to leave the employ of the
Corporation or to become employed by any Person other than the
Corporation.
(e) the Contractor shall cause any copies or reproductions of
the Confidential Information made by the Contractor to bear
the copyright or proprietary notices contained in the
original.
(f) the Contractor shall, upon completion of the Services,
upon termination of the Contractor's engagement hereunder, or
upon demand, whichever is earliest, return to the Corporation
any and all Confidential Information, including any copies or
reproductions, in Contractor's possession or control.
(g) the Contractor shall promptly advise the Corporation if
the Contractor learns of any unauthorised use or disclosure of
Confidential Information, and the Contractor shall provide to
the Corporation complete details regarding same.
(h) the Contractor acknowledges that the breach or threatened
breach of the obligations under this Article 6 by the
Contractor or any of the Contractor's shareholders, agents,
employees, representatives, or sub-contractors will give rise
to irreparable injury to the Corporation, which injury will be
inadequately compensable in money damages. Accordingly, the
Corporation may seek and obtain-injunctive relief against the
breach or threatened breach of the foregoing undertakings, in
addition to any other legal remedies that may be available.
The Contractor further acknowledges and agrees that the
covenants and agreements contained in this Article are
necessary for the protection of the Corporation's legitimate
business interests and are reasonable in scope and content.
6.2 For the purposes of this Article 6, "Corporation" shall be defined to
include the Corporation, its shareholders and all of its affiliated and related
companies.
6.3 The Contractor acknowledges and agrees that the Contractor is fully
responsible for ensuring the Contractor's shareholders, agents, employees,
representatives and sub-contractors are aware of the obligations set out in this
Article 6 and are bound by the same obligations to the Contractor. The
Contractor further acknowledges and agrees that the Contractor is fully liable
for any breach of threatened breach of the Contractor's obligations caused by
any act or omission by the Contractor's employees, agents, representatives and
sub-contractors.
7. Termination
-----------
7.1 The Corporation may terminate this Agreement effective immediately:
(a) Without cause at any time by paying to the Contractor,
immediately upon termination, the sum of $40,000, or equal to
four months base cash remuneration, and the payment, to the
extent payable, forthwith of the amount set forth in Schedule
"B" hereto; or
(b) immediately and without payment to the Contractor upon the
happening of a Cause for Termination
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(c) At the expiration of the probationary period, and without
cash payment to the contractor, upon notification to the
contractor, that the corporation intends to terminate this
agreement.
and thereafter the Corporation shall not be liable, except as set forth in
Section 7.4 hereof, to the Contractor or the Principal in respect of any matters
arising in connection with this Agreement.
7.2 In the event that the Corporation breaches any term of this Agreement, the
Contractor may, at any time following such breach, provided that the breach is
then continuing, give notice in writing to the Corporation setting forth the
particulars of such breach. If such breach is not remedied within ten (10) days
of the giving of such notice, the Contractor may, at any time thereafter and
prior to the time, if any, at which the breach is remedied, terminate this
Agreement by giving notice in writing thereof to the Corporation at which time,
without limiting and in addition to the rights and remedies of the Contractor as
against the Corporation as a result of such breach, the Corporation shall
forthwith pay to the Contractor the sum of US 40,000 and forthwith of the amount
set forth in Schedule "B" hereto..
7.3 Each and all of the provisions of Articles 6, 7, 15 and 16 shall survive the
termination or expiration of this Agreement until the parties mutually agree to
the release of such obligations.
7.4 Interest shall be payable both before, during, and after demand, default or
judgement until payment in full on all amounts payable by the Corporation to the
Contractor hereunder at the rate of 10% per annum calculated daily and payable
monthly with interest on over-due interest at the same said rate.
8. Notice
------
8.1 All notices under this Agreement shall be in writing and given by delivery
or by facsimile to the following addresses:
if to the Contractor or the Principal, at:
The address specified in schedule A.
if to the Corporation or at: TENGTU INTERNATIONAL, CORPORATION
Attention: Pak Cheung
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All notices are deemed to be received on the date delivered or the date the
notice is sent by facsimile. Any party may designate a different address for
notices in accordance with this Section.
9. Assignment
----------
9.1 This Agreement shall not be assignable by the Contractor without the prior
written consent of the Corporation. This Agreement shall operate to the benefit
of and be binding upon the Contractor and the Corporation and their permitted
assigns.
10. Governing Law
-------------
10.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of Ontario.
11. Waiver of Performance
---------------------
11.1 The Contractor and the Corporation may, in writing, extend the time for
performance or waive non-compliance or non-performance by the other of the
other's obligations, covenants and agreements under this Agreement. No act or
failure to act of the Contractor or the Corporation shall be deemed to be an
extension or waiver of timely or strict performance by the other of its
obligations, covenants and agreements under this Agreement.
12. Time of Essence
---------------
12.1 Time is and shall always remain the essence of this Agreement.
13. Entire Agreement
----------------
13.1 This Agreement constitutes the entire understanding and agreement between
the parties hereto, and supersedes all prior oral or written representations,
understandings or agreements between the parties with respect to engaging the
Contractor or the provision of Services by the Contractor to the Corporation.
14. Severability
------------
14.1 If any provision of this Agreement is or becomes illegal, invalid or
unenforceable such provision shall be restricted in order to render it legal,
valid and enforceable or shall be severed from the Agreement so as not to affect
the validity or enforceability of the remainder of this Agreement.
15. Previous Agreement
------------------
All previous consulting agreements among the parties are hereby
terminated and have no further force and effect.
16. Independent Contractor Status
-----------------------------
16.1 The Contractor acknowledges that the Contractor is solely an independent
contractor, and none of the employees, principals or agents of the Contractor
are employees of the Corporation or are entitled to any employment rights or
benefits from the Corporation. Because of the Contractor's independent
contractor status, no tax withholding shall be made from the payments
contemplated by Article 5 hereof. The Contractor agrees to indemnify the
Corporation for any tax liabilities or penalties the Corporation may incur by
reason of the Contractor's performance hereunder.
17. No Authority to Bind Corporation
--------------------------------
17.1 The Contractor has no authority to enter into contracts or agreements on
behalf of the Corporation by virtue of this Agreement. Nothing in this Agreement
shall be construed as creating a joint venture, agency or partnership
relationship between the Parties hereto.
18. Compliance with Laws
--------------------
18.1 The Contractor agrees to comply with all applicable federal, provincial,
state, county, municipal and local laws, ordinances, regulations, and codes in
performance of the Contractor's obligations under this Agreement, including laws
and executive orders relating to equal opportunity and non-discrimination in
employment. The Contractor further agrees to hold harmless and indemnify the
Corporation or the appropriate subsidiary or affiliate of the Corporation
against any loss or damage, including reasonable solicitors' fees, that may be
sustained by reason of the failure of Contractor or the Contractor's
employee(s), agent(s), or subcontractor(s) to comply with any laws, ordinances,
regulations and codes.
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19. Other Matters
-------------
19.1 For the purpose of Subsection 1.1(b) and Articles 6, 7, 15, 16, 17, 18 and
Schedule "A" and "B", notwithstanding the specific definition in this Agreement,
any reference to Contractor is deemed to include each of 1334945 Ontario Limited
and the Principal, both singularly and collectively and the obligations arising
hereunder shall be joint and several. In consideration of the covenants of the
Principal, the Corporation shall pay the remuneration provided for hereunder as
directed by the Principal pursuant to Section 5.1.
20. Schedule
--------
20.1 The parties acknowledge that Schedule "A" and "B" form part of this
Agreement and is incorporated herein by reference.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first written above.
1334945 ONTARIO LIMITED
-----------------------
By: GREG MAVROUDIS
------------------
Title: PRESIDENT
-------------------
----------------------
Witness GREG MAVROUDIS
TENGTU INTERNATIONAL CORP.
--------------------------
By: PAK CHEUNG
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Title: CHAIRMAN and CEO
----------------
----------------------
Witness
---------- /s/----------
PAK CHEUNG
SCHEDULE "A"
1. Scope of Services
-----------------
The Contractor's services shall be provided as required to fulfil the
Contractor's obligations to the Corporation hereunder and shall consist of
management Consulting including providing the services of the Principal as the
VP of Business Development during the initial six month period responsible for
Execution and Administration of Corporate Business Strategy, Growth Management
and Strategic Relationships with Industry Partners, including certain
expectations of the corporation outlined in Schedule C.
2. Fee for Services
----------------
The Corporation agrees to pay the to the Contractor during the term of this
Agreement a monthly fee of Ten Thousand US Dollars ($ 10,000) per month for the
services rendered hereunder,
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3. Address
-------
The Contractor's and Principal's address for notices under this agreement is:
1334945 ONTARIO LIMITED
16 Hazel Avenue
Toronto, Ontario
M4E 1C5
Canada
Attention: Greg Mavroudis
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4. Non-Competition Areas and Duration:
Canada, the United States, Korea, Japan, Taiwan, Hong Kong and China,
for a period of one year from the date of termination of this
Agreement.
SCHEDULE "B"
PART ONE
STOCK COMPENSATION PACKAGE
The Corporation shall issue 250,000 of its common shares (under short form S-8,
subject to the Company's (Tengtu) eligibility), from its treasury, to the
Contractor under the following terms and conditions:
1/ The Corporation, following a 6 month evaluation period, which starts on April
1st, 2000 of the Contractors performance of assigned duties and tasks,
determines to engage the Contractor, for a period of 24 months, as described in
the Independent Contractors Agreement, above.
2/ Upon determining to engage the Contractor under the terms of the above
described agreement, 10% or 25,000 shares of the above 250,000 share
compensation package issued by the Corporation shall be considered vested.
3/ Following the 12 month anniversary of entering into a 24 month Independent
Contractors Agreement, 45% (112,500 shares) of the 250,000 shares shall be
considered to be vested.
4/ Following the 24 month anniversary of entering into a 24 month Independent
Contractors Agreement, 45% (112,500 shares) of the 250,000 shares shall be
considered to be vested.
PART TWO
"A"
STOCK OPTION COMPENSATION PACKAGE
The Corporation shall grant a Stock Option Plan (under short form S8, subject to
the Company's (Tengtu) eligibility), to the Contractor with the closing market
price of June 9th 2000 the equivalent of $1.00 per share, of said option, under
the following terms and conditions:
1/ The Corporation, shall grant an irrevocable Stock Option to the Contractor,
in the amount of 37,500 shares of the Corporation in 90 days of the 6 month
evaluation period, with an exercise price, as above, less the maximum allowed
discount by SEC.
2/ The Corporation, shall grant an irrevocable Stock Option to the Contractor,
in the amount of 37,500 shares of the Corporation after 90 days and before the
180 days expire on the 6 month evaluation period which started on April 1st
2000, with an exercise price, as above, less the maximum allowed discount by
SEC.
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"B"
1/ The Corporation, shall grant a Stock Option Plan to the Contractor, once the
Corporation's Compensation Committee approves such plan. It is anticipated that
such plan will get formed within 90 days of this agreement and it will be at the
executive level.
PART THREE
1/ In the event that the Corporation is sold or changes control both the stock
and option play described in Schedule "B" will vest immediately as if the 24
month period had occurred.
2/ Once the 24 month agreement is in effect and this agreement is terminated
without cause, then the Corporation will reimburse the Contractor in accordance
to section 7.1(a) and under the following terms:
a. After six months: 25% of the remaining unvested Stock and
Stock Option Package
b. After twelve months: 50% of the remaining unvested Stock and
Stock Option Package.
c. Alter eighteen months: 100% of the remaining unvested Stock
and Stock Option Package.
3/ When the Corporation spins off subsidiaries, the contractor will be
entitled to a pro rata stock and options in the new entity.
SCHEDULE C
The following sets out the expectations for the initial 6 months of trial
period, broken down into two sub stages. The consultant shall coordinate with
Pak Cheung and various TIC subsidiaries on formulating a detailed operating
plan. There is no penalty to either party for early termination during this
trial period, but there are bonuses for accomplishments.
1. Construction of a virtual development office using Internet
facilitated high speed communication methodologies to manage the product
development processes involving China, Hong Kong, and North America:
2. First stage products: demonstration versions to be completed in
June, 2000 and ready for implementation in September of 2000.
Children's browser
Children's search engines
Home-School communication software
system complete with
Message Boards, Chat Room
and integration with the
school Data Base system.
School web site templates
3. First stage strategic partners: involves selecting interested
parties with appropriate technology suitable for China and Hong-Kong in the
following 2 major areas.
Set top box manufacturers & related
operating software ISP who has the
ability to turn a TV cable network
into an
Internet infrastructure
4. Second stage products: demonstration versions completed in September
2000 and implementation in December 2000.
Portal hardware and software
e-Business software, front-end and
back end Set top box based Internet
operating software
5. Second stage strategic partners: certain key partners to be in place
according to an implementation plan to be formulated.
Technology partners
Operator partners
Content partners
other partners
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